Southampton is a large port city located along the South Coast of England. Known for its football team and famously being the departure location of the RMS Titanic, Southampton is one of the largest cities along the South Coast and has a population of around 250,000 people.
Why invest in HMOs in Southampton?
Southampton makes an attractive choice for HMO investors. Its coastal location and cultural attractions, such as historic sites and cultural events, contribute to the city’s appeal. It’s close to the New Forest National Park and the educational institutions make it an attractive destination for students and young professionals. Southampton does however have a large blanket Article 4 direction which controls the conversion of houses to HMO’s.
Southampton’s planning authority is notoriously difficult when it comes to HMOs given a long history of poor quality HMO properties disrupting the cohesion of the local community. There are tight rules and requirements when it comes to increasing HMO properties to larger HMO’s or converting family houses to HMOs. However, Southampton still approves houses to be converted into HMO’s even though it is an Article 4 location. But, you must meet the requirements, which we will go into more detail to explain below.
Universities
When it comes to picking a good HMO investment location universities are vital whether you wish to let to students or not. The type of professionals that rent HMOs are typically newly graduated and looking for local shared houses. These people will typically have a good amount of spare cash to afford the high end professional HMO room which is desirable to landlords.
The city centre is home to 2 major universities including the University of Southampton and Solent University, with Winchester University only a 20 minute train ride from the city in the SO postcode area. This means there is a very high student population, making HMOs a reliable source of rental income.
The prime letting period for students in Southampton is January and February which is when the best houses are reserved for the following year. There is another surge in interest in June – August when the overseas students come over and look for accommodation.
Economic Activity
Beyond students, there’s a large population of young professionals, especially in healthcare, maritime and shipping and tech and engineering sectors. This is because it is a large port city with many maritime jobs and is also home to Southampton General Hospital which specialises in major trauma care, neurosciences, oncology, cardiology, and other specialist areas, including a dedicated children’s hospital. Many professionals prefer shared housing such as HMOs for affordability and social reasons.
Transport Links
Southampton benefits from excellent transport links, which includes its port, central railway station with a direct line to London and Manchester and proximity to the M27. Proximity to public transport and amenities is often a crucial factor for tenants.
In addition, the city centre covers 72.8 square kilometers making it a medium-sized city in the UK. Most of the urban area is walkable, but there are direct buses from most suburbs into the city centre and universities.
Read more about Southampton transport links >
Article 4 in Southampton
Since 2012, an Article 4 direction has been in place in Southampton, removing permitted development rights to change a family home (C3) into a small HMO (C4). This applies to the whole city. Planning permission is therefore required to convert a dwellinghouse to a small/medium HMO as well as to convert a property into a large HMO for 7 or more occupants.
However, on the HMO Checker HMO Planning Permission Tool we can see that there are many instances where C4 to C4 or Sui Generis applications have been granted:
HMO Checker also assesses local authority websites for all the HMO relevant applications and makes an assessment over likelihood of permission. As you can see below, 62% likelihood is quite high, meaning Southampton as a council are generally still receptive to new HMO applications, so long as you meet their local guidance and requirements.
The Houses in Multiple Occupation Supplementary Planning Document (SPD HMO), as well as the Southampton Council website states that the tipping point where the concentration of HMOs begins to adversely impact on the character and balance of a local community is set at 10% of HMOs in the housing stock. This means that they will not grant permission for any new HMOs where the proportion of HMOs within a 40 metre radius is above 10% (unless exceptional circumstances apply). The document also prohibits “sandwiching”, whereby a residential property is sandwiched between two HMOs.
Using HMO Checker’s HMO Density Checker, we can set the radius to 40m and know whether the property meets the local requirement, see below:
In the example above this property would not suit being converted from a family house to an HMO because it would bring the percentage of HMOs to family houses over the council’s 10% threshold.
An interesting nuance to the council’s threshold of 40m and 10% is that if they do not find 10 residential houses within the first 40m radius, they will keep expanding it until they do. For example, if the property is within a commercial area, they will expand the radius until they find at least 10 residential houses. The obvious issue with this is that you could then unfortunately come across more HMO’s and thus the percentage would increase. Our advice is that if you do not see at least 10 residential houses in the radius check at 40m, proceed with caution or get in touch with an expert.
We recommend reviewing the Supplementary Planning Document as it has been specifically written to help people understand the planning system and how the council intends to deal with planning applications for C4 HMO uses.
The Article 4 Direction applies citywide, but areas with higher concentrations of HMOs, such as The Polygon (a location I lived in an HMO myself in my student days), Portswood, Bevois Valley, Swaythling, and Bargate, are particularly affected. Investors should exercise caution and conduct thorough due diligence when considering properties in these neighbourhoods.
HMO Licensing in Southampton
As with the rest of the UK, Southampton is subject to mandatory licensing if your HMO has at least five occupants forming more than one household and the occupants share a toilet, bathroom or kitchen facilities.
Previously, Southampton had an additional licensing scheme for smaller HMOs (three or four occupants) in specific wards: Bevois, Bargate, Portswood, and Swaythling. However, as of 30 September 2023, this scheme expired.
In November 2024, Southampton City Council launched another consultation on a new HMO licensing scheme. The new consultation aims to extend licensing to smaller HMOs (three or more tenants) in wards including Banister and Polygon, Bargate, Bassett, Bevois, Freemantle, Millbrook, Portswood, Shirley, and Swaythling. We recommend staying up to date with all local licensing rules in Southampton, as they change fairly frequently.
Southampton HMO Rental Yields
Southampton’s significant student population and growing demand for shared housing among young professionals make HMOs a potentially lucrative investment. According to property data, rental yields for HMOs in the city often range between 7% and 15%, surpassing the typical 4%-6% yields of standard buy-to-let properties.
Best Areas to Invest In
Shirley Portswood, Highfield, and St. Denys
Best for: Professionals & Student HMOs
The areas of Portswood, Highfield and St. Denys are all within walking distance to the main University campus for the University of Southampton, which makes them a high demand area for students. They are also well connected into the city center benefitting from good transport links.
In addition the SO17 postcode offers some of the best rental yields thanks to the consistent professional and student demand. There is a vibrant mix of shops, cafes and bars for students as well.
Shirley
Best for: Professional HMOs
Shirley is situated in close proximity to the Southampton General Hospital, making it a popular residence for NHS staff and other medical professionals. Shirley has affordable property prices which makes it popular with investors
Swaythling and Bassett
Best for: Budget student HMOs
Swaythling and Basseyy are also close to the University of Southampton’s engineering and science facilities, and Swaythling in particular offers better value properties compared to some other areas in Southampton. While Bassett offers an average 4% yield, student and professionally let properties and HMOs in these areas can achieve much more.
Finding the Best HMO Investment Property in Southampton
If you are currently conducting research into investing in HMOs in Southampton, you will likely find yourself researching the different areas, property types, rental yields and more. We recommend trying out HMO Checker.
This tool is used by HMO investors to check properties in their desired area against a number of criteria, including HMO density, Article 4, estimated rental yield, planning approval likelihood and more. You simply need to put in the address of the property you are looking at and it will do all the heavy lifting for you.
If you sign up you’ll get two free credits to check 2 properties without any credit card information. We recommend giving it a try, as many investors have found it incredibly helpful in facilitating their HMO investment projects. Give it a go >
Southampton HMO Project Example
In 2023, we worked on an HMO project in Southampton on Burlington Road. This was a 7 Bedroom HMO project. We were approached to provide a feasibility study of the property, organise the relevant surveys and obtain planning and building regulation approval.
We managed to obtain all the necessary permissions and complete the project. Here are some of the highlights from the Southampton HMO project as well as pictures of the final build:
- Purchase price £220,000
- Original rent £1150 a month
- Construction cost £180,000
- Completed Valuation £665,000
To see more, take a look at the full project.
Final Takeaways from HMO Investment in Southampton
To conclude, Southampton is a vibrant and growing investment area for both BTL and HMO investors. We have helped facilitate many successful HMOs in Southampton, so if you are looking for any advice, please feel free to reach out.
Here are our key takeaways:
- High rental demand is driven by major universities and a young professional population.
- Typical HMO yields range between 6–12%, outperforming many single-let investments.
- Planning permission is required for new HMOs in most central areas – this limits supply and protects existing licensed HMOs from oversaturation, but also lessens competitiveness.
- Compared to London or nearby Brighton, Southampton offers better value for capital investment with room for appreciation.
- Licensing rules are ever changing so make sure to check the Southampton City Council website specifically when you are doing your research for the most up to date information.
- Major development projects and improved transport infrastructure are boosting long-term capital growth potential.
